ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.

CHAPTER

FINAL ACCOUNTS OF SOLE PROPRIETORS 8

QUESTIONS & ANSWERS

DESCRIPTIVE QUESTIONS

1. Date: NB Pg. No. Stars: Exam: (FDN Nov. 2018) (Q.1(b)) (4 Marks)

Discuss the limitations which must be kept in mind while evaluating the Financial Statements.
Ans.

TRUE OR FALSE

2. Date: NB Pg. No. Stars: Exam: (FDN Dec. 2021) (Q.1(a)(iii) (2 Marks)

The provision for bad debts is debited to sundry debtors account.

Ans. False: The provision for bad debts is debited to Profit and loss Account, in Balance Sheet it is shown
either on liability side or deducted from the head debtors.

3. Date: NB Pg. No. Stars: Exam: (FDN Jun. 2023) (Q.1(a)(vi) (2 Marks)
Overhead is defined as the total cost of direct material, direct wages and direct expenses.
Ans. False: Overhead is defined as total cost of indirect material, indirect wages and indirect expenses.
Indirect material, wages and expenses cannot be directly linked to unit produced.

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 8.2 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

4. Date: NB Pg. No. Stars: Exam: (FDN Dec. 2023) (Q.1(a)(ii) (2 Marks)

The gain from sale of capital assets is added to revenue to ascertain the net profit of the business.
Ans. True: Gains from the sale of capital assets are considered as the revenue of the business. But this
revenue is not in the ordinary course of business so it is capital receipts.

PRACTICAL QUESTIONS

5. Date: NB Pg. No. Stars: Exam: (FDN May 2018) (Q.3) (20 Marks)

The following are the balances extracted from the books of Shri Raghuram as on 31.03.2018, who
carries on business under the name and style of M/s Raghuram and Associates at Chennai:
Particulars Debit ( ) Credit ( )
Capital A/c 14,11,400
Purchases 12,00,000
Purchase Returns 18,000
Sales 15,00,000
Sales Returns 24,000
Freight Inwards 62,000
Carriage Outwards 8,500
Rent of Godown 55,000
Rates and Taxes 24,000
Salaries 72,000
Discount allowed 7,500
Discount received 12,000
Drawings 20,000
Printing and Stationery 6,000
Insurance premium 48,000
Electricity charges 14,000
General expenses 11,000
Bank charges 3,800
Bad debts 12,200
Repairs the Motor vehicle 13,000
Interest on loan 4,400
Provision for Bad-debts 10,000
Loan from Mr. Rajan 60,000
Sundry creditors 62,000

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.3

Motor vehicles 1,00,000

Land and Buildings 5,00,000
Office equipment 2,00,000
Furniture and Fixtures 50,000
Stock as on 31.03.2017 3,20,000
Sundry debtors 2,80,000
Cash at Bank 22,000
Cash in Hand 16,000
Total 30,73,400 30,73,400
Prepare Trading and Profit and Loss Account for the year ended 31.03.2018 and the Balance Sheet
as at that date after making provision for the following:
(a) Depreciate Building by 5%, Furniture and Fixtures by 10%, Office Equipment by 15% and Motor
Car by 20%.
(b) Value of stock at the close of the year was 4,10,000.
(c) One month rent for godown is outstanding.
(d) Interest on loan from Rajan is payable @ 10% per annum. This loan was taken on 01.07.2017
(e) Reserve for bad debts is to be maintained at 5% of Sundry debtors.
(f) Insurance premium includes 42,000 paid towards proprietor's life insurance policy and the
balance of the insurance charges cover the period from 01 04.2017 to 30.06.2018.
Ans.

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 8.4 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.5

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 8.6 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

6. Date: NB Pg. No. Stars: Exam: (FDN Nov. 2018) (Q.3, (b)) (10 Marks)

Mr. Fazhil is a proprietor in business of trading. An abstract of his Trading and P&L account is as
follows:
Trading and P&L A/c for the year ended 31st March, 2018
Particulars ( ) Particulars ( )
To Cost of Goods sold 22,00,000 By Sales 45,00,000
To Gross Profit C/d ?
? 45,00,000
To Salaries paid 12,00,000 By Gross Profit B/d ?
To General Expenses 6,00,000 By Other Income 45,000
To Selling Expenses ?
To Commission to Manager (On net profit 1,00,000
before charging such commission)
To Net Profit ?
? ?
Selling expenses amount to 1% of total Sales.
You are required to compute the missing figures.
Ans.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.7

7. Date: NB Pg. No. Stars: Exam: (FDN May 2019) (Q.4, (b))
Following particulars are extracted from the books of Mr. Sandeep for the year ended 31st December, 2023.
Other information:
Particulars Amount Particulars Amount
Debit Balances: Credit Balances:
Cash in hand 1,500 Capital 16,000
Purchase 12,000 Bank overdraft 2,000
Sales return 1,000 Sales 9,000
Salaries 2,500 Purchase return 2,000
Tax and Insurance 500 Provision for Bad debts 1,000
Bad debts 500 Creditors 2,000
Debtors 5,000 Commission 500
Investments 4,000 Bills payable 2,500
Opening stock 1,400
Drawings 2,000
Furniture 1,600
Bills receivables 3,000 ______
35,000 35,000
Other information:
(i) Closing stock was valued at 4,500
(ii) Salary of 100 and Tax of 200 are outstanding whereas insurance 50 is prepaid.
(iii) Commission received in advance is 100.
(iv) Interest accrued on investment is 210
(v) Interest on overdraft is unpaid 300
(vi) Reserve for bad debts is to be kept at 1,000
(vii) Depreciation on furniture is to be charged @ 10%
You are required to prepare the final accounts after making above adjustments.
Ans.

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 8.8 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

8. Date: NB Pg. No. Stars: Exam: (FDN Nov. 2019) (Q.5, (b)), 5 Marks
Mr. Shyamal runs a factory, which produces detergents. Following details were available in respect of his
manufacturing activities for the year ended 31.03.2023.
Opening work-in-progress (9000 units) 26,000
Closing work-in-progress (14,000 units) 48,000
Opening inventory of Raw Materials 2,60,000
Closing inventory of Raw Materials 3,20,000
Purchases 8,20,000
Hire charges of Machinery @ 0.70 per unit manufactured Hire charges of factory 2,60,000
Direct wages-contracted@ 0.80 per unit manufactured and @ 0.40 per unit of closing W.I.P.
Repairs and maintenance 1,80,000
Units produced - 5,00,000 units
You are required to prepare a Manufacturing Account of Mr. Shyamal for the year ended 31.03.2023.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.9

Ans.

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 8.10 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

9. Date: NB Pg. No. Stars: Exam: (FDN Nov. 2019) (Q.5, (c)), 5 Marks
The balance sheet of Mittal on 1st January, 2018 was as follows:
Liabilities Amount Assets Amount
Trade payables 16,00,000 Plant & Machinery 31,00,000
Expenses payable 2,50,000 Furniture & Fixture 4,00,000
Capital 51,00,000 Trade receivables 14,50,000
Cash at bank 7,00,000
Inventories 13,00,000
69,50,000 69,50,000
During 2018, his profit and loss account revealed a net profit of 15,10,000. This was after allowing for the
following:
(i) Interest on capital @ 6% p.a.
(ii) Depreciation on plant and machinery @ 10% p.a. and on Furniture and Fixtures @ 5% p.a..
(iii) A provision for Doubtful debts @ 5% of the trade receivables as at 31st December 2018.
But while preparing the profit and loss account he had forgotten to provide for (1) outstanding expenses
totalling 1,85,000 and (2) prepaid insurance to the extent of 25,000.
His current assets and liabilities on 31st December, 2018 were: Trade receivables 21,00,000; Cash at bank
5,20,000 and Trade payables 13,84,000. During the year he withdrew 6,20,000 for domestic use. Closing
inventories is equal to net trade receivables at the year-end.
You are required to draw up revised Profit and Loss account and Balance Sheet at the end of the year.
Ans.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.11

10. Date: NB Pg. No. Stars: Exam: (FDN Nov. 2020) (Q.5, (b)), 5 Marks
Max & Co. employs a team of 9 workers who were paid 40,000 per month each in the year ending 31st
December, 2022. At the start of 2023, the company raised salaries by 10% to 44,000 per month each.
On 1 July, 2023 the company hired 2 trainees at salary of 21,000 per month each. The work force are paid
salary on the first working day of every month, one month in arrears, so that the employees receive their
salary for January on the first working day of February, etc.
You are required to calculate:
(i) Amount of salaries which would be charged to the profit and loss account for the year ended 31st
December, 2023.
(ii) Amount actually paid as salaries during 2023.
(iii) Outstanding salaries as on 31st December, 2023.
Ans.

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 8.12 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

10. Date: NB Pg. No. Stars: Exam: (FDN Nov. 2020) (Q.5, (c)), 10 Marks
Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c provided by M/s. Shivam related
to financial year 2022-23. There are certain figures missing in these accounts.
Raw Material A/c
Particulars Amt. ( ) Particulars Amt. ( )
To Opening Stock A/c 1,27,000 By Raw Materials Consumed
To Creditors A/c - By Closing Stock -

Creditors A/c
Particulars Amt. ( ) Particulars Amt. ( )
To Bank A/c 23,50,000 By Balance b/d 15,70,000
To Balance c/d 6,60,000 -

Manufacturing A/c
Particulars Amt. ( ) Particulars Amt. ( )
To Raw Material A/c - By Trading A/c 17,44,000
To Wages 3,65,000
To Depreciation 2,15,000
to Direct Expenses 2,49,000
Additional Information:
(i) Purchase of machinery worth 12,00,000 on 1st April; 2022 has been omitted, Machinery is chargeable
at a depreciation rate of 15%.
(ii) Wages include the following:
Paid to factory workers - 3,15,000
Paid to labour at office - 50,000
(iii) Direct expenses included the following:
Electricity charges - 80,000 of which 25% pertained to office
Fuel charges - 25,000
Freight inwards - 32,000
Delivery charges to customers - 22,000
You are required to prepare revised Manufacturing A/c and Raw Material A/c.
Ans.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.13

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 8.14 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

11. Date: NB Pg. No. Stars: Exam: FDN Jan. 2021, Q.5 (b), 5 Marks
Mr. K is engaged in business of selling magazines. Several of his customers pay money in advance for
subscribing his magazines. Information related to year ended 31st March, 2020 has been given below:
On 1st April, 2019 he had a balance of 3,00,000 advance from customers of which 2,25,000 is related to
year 2019-20 while remaining pertains to year 2020-21- During the year 2019-20 he made cash sales of
7,50,000.
You are required to compute:
(i) Total income for the year 2019-20.
(ii) Total money received during the year, if the closing balance as on 31st March, 2020 in Advance from
Customers Account is 2,55,000.
Ans.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.15

12. Date: NB Pg. No. Stars: Exam: FDN Jul. 2021, Q.4 (a), 10 Marks
Karuna decided to start business of fashion garments under the name of M/s. Designer Wear on 1st April,
2022. She had a saving of about 10,00,000. She invested 3,00,000 out of her savings and borrowed equal
amount from bank. She purchased a commercial space for 5,00,000 and further spent 1,00,000 on its
renovation to make it ready for business.
Loan and interest repaid by her in the first year are as follows:
30th June, 2022 - 15,000 principal + 9,000 interest
30th September, 2022 - 15,000 principal + 8,550 interest
31st December, 2022 - 15,000 principal + 8,100 interest
31st March, 2023 - 15,000 principal + 7,650 interest
In view of further capital requirement, she transferred 2,00,000 from her saving bank account to the bank
account of the business. She paid security deposit of 7,000 for telephone connection. Furniture of 10,000
was purchased, All payments were made by cheque and all receipts in cash were deposited in the bank.
At the end of the year, her business showed the following results:
Particulars Amount Particulars Amount
Total Sales 20,00,000 Total Purchases 17,00,000
Electricity Expenses paid 40,000 Telephone Charges 50,000
Cartage Outwards 60,000 Travelling Expenses 45,000
Entertainment Expenses 5,000 Maintenance Expenses 25,000
Misc. Expenses 15,000 Electricity Expenses Payable 20,000
Other Information:
(i) She withdrew 5,000 by cheque each month for her personal expenses.
(ii) Depreciation on building @ 5% p.a. and oil furniture @ 10% p.a.
(iii) Closing stock in hand as on 31st March, 2023: 5,50,000
Prepare trading account, profit and loss account for the year ended 31.03.2023 and Balance Sheet as on that
date.
Ans.

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 8.16 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.17

13. Date: NB Pg. No. Stars: Exam: FDN Jul. 2021, Q.5 (b(ii)), 5 Marks
PQR Limited's Profit and Loss account for the year ended 31st March, 2023 includes the following
information:
(1) Liability for Income Tax 40,000
(2) Retained Profit 2,00,000
(3) Proposed Dividend 20,000
(4) Increase in Provision for Doubtful Debts 25,000
(5) Bad Debts written off 20,000
State which one of the items above is - (a) transfer to provisions; (b) transfer to reserves; and (c) neither
related to provisions nor reserves.
Ans.

14. Date: NB Pg. No. Stars: Exam: FDN Dec. 2021, Q.5 (b), 15 Marks
On 31st March, 2023 the Trial Balance of Mr. Black was as follows:
Particulars Debit ( ) Particulars Credit ( )
Stock on 01.04.2022 Sundry Creditors 1,50,000
Raw Materials 2,10,000 Bills Payables 75,000
Work-in-Progress 95,000 Sale of scrap 25,000
Finished Goods 1,55,000 Commission received 4,500
Sundry Debtors 2,40,000 Provision for doubtful debts 16,500
Carriages on Purchase 15,000 Capital account 10,00,000
Bills Receivables 1,50,000 Sales 16,72,000
Wages 1,30,000 Bank overdraft 85,000
Salaries 1,00,000
Telephone and Postage 10,000
Repairs to office furniture 3,500
Cash at Bank 1,70,000
Office Furniture 1,00,000

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 8.18 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

Particulars Debit ( ) Particulars Credit ( )

Repairs to Plant 11,000
Purchases 8,50,000
Plan and Machinery 7,00,000
Rent 60,000
Lighting 13,500
General Expenses 15,000
30,28,000 30,28,000
The following additional information is available:
Stocks on 31st March, 2023 were:
Raw material 1,62,000
Finished goods 1,81,000
Work-in-progress 78,000
Salaries and wages unpaid for the year ended 31st March, 2023 were respectively, 9,000 and 20,000.
Machinery is to be depreciated by 10% and office furniture by 7½%. A provision for doubtful debts is to be
maintained @1% of sales. Rent is to be charged as to 3/4 to factory and 1/4 to office. Lighting is to be charged
as to 2/3 to factory and 1/3 to office.
Prepare the Manufacturing Account, Trading Account and Profit and Loss Account for the year ended on 31st
March, 2023.
Ans.

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 8.20 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

15. Date: NB Pg. No. Stars: Exam: FDN May 2022, Q.5, 20 Marks
The following is the trial balance of Mr. B for the year ended 31st March, 2023:
Particulars Dr. ( ) Particulars Cr. ( )
Opening Stock: Sundry Creditors 1,75,000
Raw Material 5,25,000 Purchase Return 17,500
Finished Goods 2,62,500 Capital 3,50,000
Purchase of Raw Material 17,50,000 Bills Payable 84,000
Land & Building 3,50,000 Long Term Loan 7,00,000
Loose Tools 1,05,000 Provision for bad and doubtful debts 7,000
Plant and Machinery 1,05,000 Sales 29,75,000
Investments 87,500 Bank Overdraft 80,500
Cash in Hand 70,000
Cash at Bank 17,500
Furniture and Fixtures 52,500
Bills Receivables 52,500
Sundry Debtors 1,40,000
Drawings 70,000
Salaries 70,000
Coal and Fuel 52,500
Factory rent and rates 70,000
General Expenses 14,000
Advertisement 17,500
Sales Return 35,000
Bad Debts 14,000
Direct Wages (Factory) 2,80,000
Power 1,05,000
Interest paid 24,500
Discount allowed 10,500
Carriage inwards 52,500
Carriage outwards 24,500
Commission paid 17,500
Dividend paid 14,000
43,89,000 43,89,000
Additional Information:
(i) Stock of finished goods at the end of the year was 3,50,000.
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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.21

(ii) A provision for doubtful debts is to be created @ 5% on Sundry Debtors. Provide Depreciation on
building 3,500 and Plant and Machinery 10,500.
(iii) Accrued commission is 43,750. Interest has accrued on investment 52,500.
(iv) Salary Outstanding is 7,000 and Prepaid Interest is 5,250.
You are required to prepare Manufacturing, Trading and Profit & Loss Account for the year ended 31st March,
2023 and Balance Sheet as at that date.
Ans.

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 8.22 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.23

16. Date: NB Pg. No. Stars: Exam: FDN Dec. 2022, Q.5, 10 Marks
The balance sheet of S on 1st April, 2022 was as follows:
Particulars Amount Particulars Amount
( ) ( )
Trade Payables 6,50,000 Furniture and Fixtures 6,50,000
Expenses Payable 75,000 Vehicle 2,75,000
Capital 22,00,000 Trade Receivable 11,00,000
Cash at Bank 4,75,000
Inventories 4,25,000
29,25,000 29,25,000
During 2022-23, his profit and Loss Account revealed a net profit of 6,70,000. This was after allowing for
the following:
(i) Commission paid to selling agent 65,000
(ii) Discount received from creditors 75,000
(iii) Purchased a vehicle of 50,000 on 31st March, 2023
(iv) Depreciation on Furniture and Fixtures @ 10% and on Vehicle @ 20%
(v) A provision for doubtful debts @ 3% of the trade receivables as at 31st March, 2023 But while
preparing the Profit and Loss Account he had forgotten to provide for
(1) prepaid expenses 15,000 and
(2) outstanding commission 35,000.
His current assets and liabilities on 31st March, 2023 were: Inventories 6,50,000. Trade Receivables
13,00,000 (before provision for doubtful debts), cash at Bank 5,50,000 and Trade Payables 1,46,000.
During the year he introduced further capital of 3,00,000 into the business.
You are required to prepare the balance sheet as at March 31, 2023.

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 8.24 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT
Ans.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.25

16. Date: NB Pg. No. Stars: Exam: FDN Jun. 2023, Q.2(c), 5 Marks
The Profit and Loss account of Ram showed a net profit of 5,75,000 after considering the closing stock of
2,55,000 on 31st March 2022. Subsequently the following information was obtained from scrutiny of the
books.
(i) Purchases for the year included 10,500 paid for electrical fittings of the shop.
(ii) Ram gave goods worth of 25,000 as free samples for which no entry was made.
(iii) Invoices for goods amounting to 1,85,000 have been entered on 29th March 2022 but were not
included in the stock.
(iv) Sales amounting to 2,05,000 were dispatched on 27th March but were included in sales of April,
2022.
(v) Goods costing 55,000 were sent on sale or return basis in March, 2022 at a margin of profit of 33½
% on cost. Approval was given in April, 2022 but these were considered as sales in March, 2022.
Calculate. the value of stock as on 31st March, 2022 and the adjusted net profit for the year ended on that
date.
Ans.

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 8.26 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

17. Date: NB Pg. No. Stars: Exam: FDN Dec. 2023, Q.4(a), 15 Marks
The following is the schedule of balances as on 31.03.23 extracted from the books of M/s RM & Co.
Particulars Dr. Cr.
Bank charges 24,000
Buildings 9,00,000
Capital A/c 19,48,000
Carriage Outwards 30,000
Cash at bank 39,000
Cash at hand 21,000
Discount allowed 36,000
Discount received 24,000
Drawings 1,80,000
Electricity Charges 33,000
Freight on purchases 18,000
Furniture & fixtures 3,21,000
General office expenses 45,000
Insurance Premium 82,500
Interest on loan 35,000
Loan 6,00,000
Printing and Stationery 27,000
Purchase Returns 39,000
Purchases 21,30,000
Rent for Godown 82,500
Salaries 1,65,000
Sales 35,50,000
Sales Returns 63,000

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.27

Particulars Dr. Cr.

Stock on 1.4.2022 9,30,000
Sundry Creditors 6,45,000
Sundry Debtors 12,90,000
Vehicles 3,00,000
Vehicles running expenses 54,000
TOTAL 68,06,000 68,06,000
Prepare Trading and Profit & Loss Account for the year ended 31st March 2023 and the Balance sheet as at
that date after making provision for the following:
(i) Value of stock as on 31.03.2023 is 4,10,000. This includes goods returned by customers on 31st
March,2023 to the value of 22,000 for which no entry has been passed in the books.
(ii) Purchases include furniture purchased on 01.10.2022 for 30,000.
(iii) Depreciate:
(1) Building by 5%
(2) Furniture and Fixtures by 10%
(3) Vehicles by 20%
(iv) Sundry debtors include 35,000 due from Goku and Sundry creditors include 25,000 due to him.
(v) Provision for bad debts is to be maintained at 4% of Sundry Debtors.
(vi) Insurance premium includes 42,000 paid towards proprietor’s life insurance policy and the balance
of the insurance charges cover the period form 1.05.2022 to 30.4.2023.
Ans.

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 8.28 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

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 8.30 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

18. Date: NB Pg. No. Stars: Exam: FDN Sept. 2024, Q.3(a), 10 Marks
The following Trial Balance is the Trial Balance of a Proprietor as on March 31 2024. Prepare Trading and
Profit & Loss Account for the year ending March 31st 2024 and a Balance Sheet as at that date.
Particulars Amount ( ) Particulars Amount ( )
Plant and Machinery 5,00,000 Capital 4,00,000
Office Furniture 26,000 Sundry Creditors 5,20,000
Opening Stock 4,80,000 Sales 48,00,000
Motor Van 1,20,000 Bills Payable 56,000
Sundry Debtors 4,57,000 Provision for Doubtful Debts 25,000
Cash in hand 4,000 Return Outwards 55,000
Cash at Bank 65,000 Discount Received 37,000
Wages 15,00,000
Salaries 1,40,000
Purchases 21,35,000
Bills Receivable 72,000
Return Inwards 93,000
Drawings 70,000
Advertisements 60,000
Factory Rent 8,000
Insurance 63,000
General Expenses 10,000
Bad debts 25,000
Discount allowed 65,000
58,93,000 58,93,000
Additional Information to be considered:
(i) Closing Stock on March 31st 2024 is 5,20,000.
(ii) During the year, Plant and Machinery was purchased for 3,00,000 but it was debited to Purchase
Account.
(iii) 3 months factory rent is due but not paid 3,000.
(iv) Provide depreciation at 5% per annum on furniture and 10% on plant and machinery and motor van.
(v) Further bad debts 7,000.
(vi) Provision for doubtful debts to be increased to 30,000 at year- end.
(vii) Provision for discount on Debtors to be made at 2%.

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.31

Ans.

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 8.32 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.33

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 8.34 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

19. Date: NB Pg. No. Stars: Exam: FDN Jan. 2025, Q.3(a), 15 Marks
From the following schedule of balances extracted from the books of Mr. Piyush, prepare Trading and Profit
and Loss Account for the year ended 31st March, 2024 and the Balance Sheet as on that date after making
the necessary adjustments:
Particulars Dr. ( ) Cr. ( )
Capital Account 8,85,000
Stock on 1.4.2023 3,86,000
Cash in hand 18,500
Cash in Bank 73,500
Investment (at 9%) as on 1.4.2023 50,000
Deposits (at 10%) as on 1.4.2023 3,00,000
Drawings 78,000
Purchases 24,95,000
Sales 29,86,000
Return Inwards 1,10,000
Return outwards 1,38,000
Carriage inwards 1,26,000
Rent 66,000
Salaries 1,15,000
Sundry Debtors 2,35,000
Sunday Creditors 1,37,500
Bank Loan (at 12%) as on 1.10.2023 2,00,000
Furniture as on 1.4.2023 25,000
Interest paid 12,500
Interest received 28,500
Advertisement 40,300
Printing & Stationery 32,200
Electricity Charges 57,700
Discount allowed 55,200
Discount received 24,600
Bad debts 18,500
General expenses 36,800
Motor Car Expenses 8,500
Insurance Premium 30,000

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.35

Particulars Dr. ( ) Cr. ( )

Travelling Expenses 21,800
Postage & Courier 8,100
43,99,600 43,99,600
Adjustments:
(i) The value of stock as on 31st March, 2024 is 7,65,000. This includes goods returned by customers on
31st March, 2024 to the value of 25,000 for which no entry has been passed in the books.
(ii) Purchases include one furniture item purchased on 1st January, 2024 for 10,000. Depreciation @
10% p.a. is to be provided on furniture.
(iii) One months' rent is outstanding and 12,000 is payable towards salary.
(iv) Interest paid includes 9,000 paid against Bank loan and Interest received pertains to Investments and
Deposits.
(v) Provide for interest payable on Bank Loan and interest receivable on investments and deposits.
(vi) Make provision for doubtful debts at 5% on the balance under sundry debtors.
(vii) Insurance premium includes 18,000 paid towards proprietor's life insurance policy.
Ans.

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 8.36 Chapter 8 – Final Accounts of Sole Proprietors ADZ & MT

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ADZ & MT Chapter 8 – Final Accounts of Sole Proprietors 8.37

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